Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Jun. 13, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | ENDRA Life Sciences Inc. | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Entity Central Index Key | 1,681,682 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 3,907,027 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Cash | $ 133,679 | $ 144,953 |
Prepaid expenses | 1,139 | 0 |
Inventory | 40,237 | 40,105 |
Deferred offering costs | 75,000 | 0 |
Other current assets | 15,593 | 10,535 |
Total Current Assets | 265,648 | 195,594 |
Other Assets | ||
Fixed assets, net | 279,478 | 295,168 |
Total Assets | 545,126 | 490,761 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 623,129 | 434,552 |
Notes payable | 50,000 | 50,000 |
Convertible notes payable, related party, net of discount | 102,562 | 99,804 |
Convertible notes payable, net of discount | 1,149,141 | 800,172 |
Total Current Liabilities | 1,924,832 | 1,384,528 |
Total Liabilities | 1,924,832 | 1,384,528 |
Stockholders’ Deficit | ||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, $0.0001 par value; 50,000,000 shares authorized; 723,335 and 723,335 shares issued and outstanding | 72 | 72 |
Stock payable | 90,000 | 81,000 |
Additional paid in capital | 11,790,318 | 11,543,634 |
Accumulated deficit | (13,260,096) | (12,518,473) |
Total Stockholders’ Deficit | (1,379,706) | (893,767) |
Total Liabilities and Stockholders’ Deficit | $ 545,126 | $ 490,761 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock shares, par value | $ .0001 | $ 0.0001 |
Preferred stock shares, authorized | 10,000,000 | 10,000,000 |
Preferred stock shares, issued | 0 | 0 |
Preferred stock shares, outstanding | 0 | 0 |
Common stock shares, par value | $ .0001 | $ 0.0001 |
Common stock shares, authorized | 50,000,000 | 50,000,000 |
Common stock shares, issued | 723,335 | 723,335 |
Common stock shares, outstanding | 723,335 | 723,335 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Operating Expenses | ||
Research and development | $ 95,814 | $ 95,237 |
Sales and marketing | 1,124 | 4,433 |
General and administrative | 263,760 | 273,786 |
Total operating expenses | 360,698 | 373,456 |
Operating loss | (360,698) | (373,456) |
Other Expenses | ||
Loss on warrant exercise | 0 | (5,823) |
Other expense | (380,926) | (199) |
Total other expenses | (380,926) | (6,022) |
Loss from operations before income taxes | (741,623) | (379,478) |
Provision for income taxes | 0 | 0 |
Net Loss | $ (741,623) | $ (379,478) |
Net loss per share – basic and diluted | $ (1.03) | $ (.52) |
Weighted average common shares – basic and diluted | 723,335 | 723,335 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash Flows from Operating Activities | ||
Net loss | $ (741,623) | $ (379,478) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 15,690 | 16,181 |
Common stock and options issued for services | 29,697 | 78,240 |
Additional warrants issued during exchange | 0 | 5,823 |
Interest on discount of convertible debt | 351,727 | 0 |
Imputed interest on promissory notes | 987 | 0 |
Changes in operating assets and liabilities: | ||
Increase in prepaid expenses | (1,139) | 0 |
Increase in inventory | (132) | (3,781) |
Increase in deferred offering costs | 75,000 | 0 |
Increase in other asset | (5,059) | 0 |
Increase in accounts payable and accrued liabilities | 188,577 | 229,257 |
Net cash used in operating activities | (236,274) | (53,757) |
Cash Flows from Investing Activities: | ||
Net cash used in investing activities | 0 | 0 |
Cash Flows from Financing Activities | ||
Proceeds from issuance of common stock | 0 | 5,000 |
Proceeds from notes payable | 0 | 50,000 |
Proceeds from convertible notes | 225,000 | 0 |
Net cash provided by financing activities | 225,000 | 55,000 |
Net Increase/(Decrease) in cash | (11,274) | 1,243 |
Cash, beginning of period | 144,953 | 19,128 |
Cash, end of period | 133,679 | 20,371 |
Supplemental disclosures: | ||
Interest Paid | 0 | 0 |
Income tax paid | 0 | 0 |
Supplemental disclosures of non-cash Items: | ||
Discount on convertible notes | 225,000 | 0 |
Common shares to be issued for accrued salaries - related parties | $ 0 | $ 60,910 |
1. Nature of the Business
1. Nature of the Business | 3 Months Ended |
Mar. 31, 2017 | |
Nature Of Business | |
Nature of the Business | ENDRA Life Sciences Inc. (“ENDRA” or the “Company”) was incorporated on July 18, 2007 as a Delaware corporation. ENDRA is developing a medical imaging technology based on the thermoacoustic effect that improves the sensitivity and specificity of clinical ultrasound. On May 8, 2017, the Company effected a one-for-3.5 reverse stock split (the “Reverse Split”) of the Company’s common stock, with no reduction in authorized capital stock. In the Reverse Split, every 3.5 outstanding shares of common stock became one share of common stock. See Note 9 below. All common stock and stock incentive plan information in these financial statements has been restated to reflect the Reverse Split. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Summary Of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Management makes estimates that affect certain accounts including deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments or contingencies. Any adjustments applied to estimates are recognized in the period in which such adjustments are determined. Basis of Presentation The accompanying unaudited financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. The balance sheet at December 31, 2016 has been derived from the audited financial statements at such date. For further information, refer to the financial statements and footnotes thereto included in ENDRA Life Sciences Inc. annual financial statements for the year ended December 31, 2016 included in Amendment No. 10 to the Company’s Registration Statement on Form S-1 filed with the SEC on May 1, 2017. Cash and Cash Equivalents The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of March 31, 2017 and December 31, 2016 the Company had no cash equivalents. Inventory The Company's inventory is stated at the lower of cost or estimated realizable value, with cost primarily determined on a weighted-average cost basis on the first-in, first-out (“FIFO”) method. The Company periodically determines whether a reserve should be taken for devaluation or obsolescence of inventory. As of March 31, 2017 and December 31, 2016 no such reserve was taken. Capitalization of Fixed Assets The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred. Capitalization of Intangible Assets The Company records the purchase of intangible assets not purchased in a business combination in accordance with the ASC Topic 350. Revenue Recognition The Company recognizes revenue in accordance with the requirements of ASC 605-10-599, which directs that it should recognize revenue when (1) persuasive evidence of an arrangement exists (contracts); (2) delivery has occurred; (3) the seller’s price is fixed or determinable (per the customer’s contract); and (4) collectability is reasonably assured (based upon our credit policy). For products sold to end users revenue is recognized when title has passed to the customer and collectability is reasonably assured; and no further efforts are required. Future revenue from anticipated new products will follow this same policy. Advertising Expense The cost of advertising is expensed as incurred. Advertising expense for the three months ended March 31, 2017 was approximately $93. Advertising expense for the three months ended March 31, 2016 was approximately $180. Income Taxes The Company utilizes ASC 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized. The Company generated a deferred tax asset through net operating loss carry-forwards. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration. Research and Development Costs The Company follows ASC 730-10, “Research and Development”. Research and development costs are charged to the statement of operations as incurred. During the three months ended March 31, 2017 and 2016 the Company incurred $95,814 and $95,237 of expenses related to research and development costs, respectively. Net Earnings (Loss) Per Common Share The Company computes earnings per share under ASC Subtopic 260-10, Earnings Per Share (“ASC 260-10”). Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted loss per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock (using the “treasury stock” method), unless their effect on net loss per share is anti-dilutive. There were 1,526,004 and 1,346,441 potentially dilutive shares, which include outstanding common stock options, warrants, and convertible notes, as of March 31, 2017 and December 31, 2016. The potential shares, which are excluded from the determination of basic and diluted net loss per share as their effect is anti-dilutive, are as follows: March 31, 2017 December 31, 2016 Options to purchase common stock 151,881 151,881 Warrants to purchase common stock 151,563 152,812 Convertible notes 1,222,561 1,041,748 Potential equivalent shares excluded 1,526,005 1,346,441 Fair Value Measurements Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in our balance sheet, where it is practicable to estimate that value. As of March 31, 2017 and December 31, 2016, the amounts reported for cash, accrued liabilities and accrued interest approximated fair value because of their short maturities. In accordance with ASC Topic 820, “Fair Value Measurements and Disclosures,” we measure certain financial instruments at fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Share-based Compensation The Company’s 2016 Omnibus Incentive Plan, which has been approved by its board of directors, permits the grant of share options and shares to its employees, consultants and non-employee members of the board of directors for up to 1,345,074 shares of common stock, of which approximately 500,000 remain available to be granted. The Company records share-based compensation in accordance with the provisions of the Share-based Compensation Topic of the FASB Codification. The guidance requires the use of option-pricing models that require the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model, and the resulting charge is expensed using the straight-line attribution method over the vesting period. The Company has elected to use the calculated value method to account for the options it issued in 2017 and 2016. A nonpublic entity that is unable to estimate the expected volatility of the price of its underlying share may measure awards based on a “calculated value,” which substitutes the volatility of appropriate public companies (representative of the company’s size and industry) as a bench mark for the volatility of the entity’s own share price. Currently, there is no active market for the Company’s common shares. The Company has used the historical closing values of these companies to estimate volatility, which was calculated to be 90%. Stock compensation expense recognized during the period is based on the value of share-based awards that were expected to vest during the period adjusted for estimated forfeitures. The estimated fair value of grants of stock options and warrants to non-employees of the Company is charged to expense, if applicable, in the financial statements. These options vest in the same manner as the employee options granted under each of the option plans as described above. Beneficial Conversion Feature If the conversion feature of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method. Debt Discount The Company determines if the convertible debenture should be accounted for as liability or equity under ASC 480, Liabilities — Distinguishing Liabilities from Equity. ASC 480 applies to certain contracts involving a company’s own equity, and requires that issuers classify the following freestanding financial instruments as liabilities. Mandatorily redeemable financial instruments, obligations that require or may require repurchase of the issuer’s equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations where at inception the monetary value of the obligation is based solely or predominantly on: ● A fixed monetary amount known at inception, for example, a payable settleable with a variable number of the issuer’s equity shares with an issuance date fair value equal to a fixed dollar amount; ● Variations in something other than the fair value of the issuer’s equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer’s equity shares; or ● Variations inversely related to changes in the fair value of the issuer’s equity shares, for example, a written put that could be net share settled. Going Concern The Company’s financial statements are prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a limited operating history and had a cumulative net loss from inception to March 31, 2017 of $13,260,096. The Company has a working capital deficit of $1,659,184 as of March 31, 2017. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and to allow it to continue as a going concern. The accompanying financial statements for the period ended March 31, 2017, have been prepared assuming the Company will continue as a going concern. The Company believes its cash resources are insufficient to meet its anticipated needs during the next twelve months. The Company will require additional financing to fund its future planned operations, including research and development and commercialization of its products. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. Management’s plans to continue as a going concern include raising additional capital through sales of equity securities and borrowing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. If the Company is not able to obtain the necessary additional financing on a timely basis, the Company will be forced to delay or scale down some or all of its development activities or perhaps even cease the operation of its business. The ability of the Company to continue as a going concern is dependent upon its ability to successfully secure other sources of financing and attain profitable operations. There is substantial doubt about the ability of the Company to continue as a going concern within one year after the date that the financial statements are issued. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, and ASU 2016-20, all of which clarify certain implementation guidance within ASU 2014-09. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company is currently in the process of analyzing the information necessary to determine the impact of adopting this new guidance on its financial position, results of operations, and cash flows. The Company plans to adopt the provisions of this statement in the first quarter of fiscal 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU require, among other things, that all income tax effects of awards be recognized in the income statement when the awards vest or are settled. ASU 2016-09 also allows for an employer to repurchase more of an employee's shares than it can today for tax withholding purposes without triggering liability accounting and allows for a policy election to account for forfeitures as they occur. [The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.] Early adoption is permitted for any entity in any interim or annual period. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosure. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |
3. Inventory
3. Inventory | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Abstract | |
Inventory | As of March 31, 2017 and 2016, inventory consisted of raw materials to be used in the assembly of a Nexus 128 system. As of March 31, 2017 and 2016, no orders were pending for such units. |
4. Fixed Assets
4. Fixed Assets | 3 Months Ended |
Mar. 31, 2017 | |
Fixed Assets | |
Fixed Assets | As of March 31, 2017 and December 31, 2016, fixed assets consisted of the following: March 31, 2017 December 31, 2016 Computer equipment and fixtures $ 571,318 $ 571,318 Accumulated depreciation (291,840 ) (276,150 ) Fixed assets, net $ 279,478 $ 295,168 Depreciation expense for the three months ended March 31, 2017 and 2016 was $15,690 and $16,181, respectively. |
5. Current Liabilities
5. Current Liabilities | 3 Months Ended |
Mar. 31, 2017 | |
Current Liabilities | |
Current Liabilities | As of March 31, 2017 and December 31, 2016, current liabilities consisted of the following: March 31, 2017 December 31, 2016 Accounts payable $ 303,172 $ 227,744 Accrued payroll 187,758 105,258 Accrued employee benefits 32,063 29,552 Accrued interest 100,136 71,998 Notes payable 50,000 50,000 Convertible notes, related party, net of discount 102,562 99,804 Convertible notes, net of discount 1,149,141 800,172 Total $ 1,924,832 $ 1,384,528 On January 28, 2016, the Company entered into promissory notes with three investors for a total amount of $50,000. The notes matured one year from the issue date, accrue no interest and are payable at maturity. The Company accounted for imputed interest of $986 for the three months ended March 31, 2017, which was calculated at a rate of 8% per annum, consistent with other notes issued by the Company. During the period ending March 31, 2017, the Company and the promissory note holders agreed to extend the maturity date of all three notes to July 31, 2017 on the same terms as previously agreed. Subsequent to the period ended March 31, 2017, the promissory notes were repaid in full to all holders. During 2016, the Company entered into convertible promissory notes with approximately 60 investors for a total principal amount of $1,386,448, $132,000 of which were purchased by related parties (the “2016 Notes”). On March 15, 2017, the Company extended the 2016 Notes offering by $250,000. The extension was made available only to existing noteholders and obtained subscriptions for $225,000. Pursuant to the terms of the 2016 Notes, noteholders holding a majority of the outstanding principal amount of the 2016 Notes elected to convert the principal and accrued interest on all outstanding 2016 Notes into shares of the Company’s common stock at a conversion price of $1.40 per share immediately prior to the Company’s initial public offering. 1,232,859 shares of the Company’s common stock were issued upon such conversion (see Note 9). In connection with the issuance of the 2016 Notes, the Company recorded a debt discount at an initial aggregate value of $1,611,448, of which $351,727 was amortized during the three months ended March 31, 2017, resulting in a debt discount balance of $359,745 as of March 31, 2017. The Company accrued interest expense of $28,138 for the period ended March 31, 2017, $2,604 of which was payable for the notes due to related parties. |
6. Capital Stock
6. Capital Stock | 3 Months Ended |
Mar. 31, 2017 | |
Capital Stock | |
Capital Stock | At March 31, 2017, the authorized capital of the Company consisted of 60,000,000 There was $9,000 of stock to be issued during the three months ended March 31, 2017 for services. There was $90,000 of stock payable as of March 31, 2017. As of March 31, 2017, there were 732,335 shares of common stock issued and outstanding (or 2,531,808, prior to taking into account the Reverse Split (see Note 9)) and no preferred stock outstanding. |
7. Stock Options and Warrants
7. Stock Options and Warrants | 3 Months Ended |
Mar. 31, 2017 | |
Stock Options And Warrants | |
Stock Options and Warrants | A summary of option activity under the Company option plans as of March 31, 2017, and changes during the period then ended is presented below: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding at December 31, 2016 151,881 $ 10.01 2.47 Granted — — — Exercised — — — Forfeited — — — Cancelled or expired — — — Balance outstanding at March 31, 2017 151,881 $ 10.01 2.22 Exercisable at March 31, 2017 127,995 $ 10.01 2.03 The following table summarizes all stock warrant activity for the three months ended March 31, 2017: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding at December 31, 2016 152,812 $ 18.94 3.30 Granted — — — Exercised — — — Forfeited — — — Expired (1,249 ) 10.01 — Balance outstanding at March 31, 2017 151,563 $ 19.01 3.08 Exercisable at March 31, 2017 151,563 $ 19.01 3.08 |
8. Commitments & Contingencies
8. Commitments & Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments Contingencies | |
Commitments & Contingencies | From time to time the Company may become a party to litigation in the normal course of business. Management believes that there are no current legal matters that would have a material effect on the Company’s financial position or results of operations. On November 11, 2007, the Company entered into an at-will employment agreement with its Chief Operating Officer (now its Chief Technology Officer). The employment agreement required annual base salary payments of $200,000 per year, with a bonus potential of 20% of the then current base salary. In addition, the executive was granted an option to purchase 29,429 shares of Company's common stock exercisable at $10.01 per share, vesting in 3 equal annual installments on each anniversary of its three year term. The agreement also provided for severance compensation if terminated other than for cause (as defined therein) of 6 months of the then applicable base salary if the COO had been employed at least 6 months, and compensation equal to 12 months of the then applicable base salary if employed over 12 months. Effective May 12, 2017, the Company and its Chief Technology Officer entered into a new employment agreement (see Note 9). On August 28, 2014, the Company entered into a services agreement with StoryCorp Consulting dba Wells Compliance Group (“StoryCorp”) for financial reporting and compliance services. David R. Wells is the owner of this firm and is the Company’s Chief Financial Officer. The services agreement called for monthly payments of $5,000, and accrued an additional $3,000 per month in fees to be paid by common stock at the time of a public offering. The accrued balance due under the cash portion as of March 31, 2017 and December 31, 2016 was $15,000 and $25,000 respectively, and the accrued balance due under the stock portion was $90,000 and $81,000, respectively. Effective May 12, 2017, the Company entered into a consulting agreement with StoryCorp Consulting that superseded the services agreement (see Note 9). Effective January 1, 2015, we entered into an office lease agreement with Green Court, LLC, a Michigan limited liability company, for approximately 3,657 rentable square feet of space, for the initial monthly rent of $5,986, which commenced on January 1, 2015 for an initial term of 60 months. Under the terms of the lease the Company has an option on the same space for an additional 60-month term. Future minimum payments under this lease are as follows: 2017 $ 56,486 2018 77,348 2019 79,269 Total $ 213,103 For the three month periods ended March 31, 2017 and 2016, the Company incurred rent expense of $18,968 and $18,165, respectively. On April 16, 2015, the Company entered into an at-will employment agreement with its Chief Executive Officer. The employment agreement required annual base salary payments of $250,000 per year with a bonus potential of 50% of the then current base salary. In addition, the executive was granted an option to purchase 35,499 shares of Company's common stock exercisable at $10.01 per share, vesting in 3 equal annual installments on each anniversary of its three year term. The agreement also provided for severance compensation if terminated other than for cause (as defined therein) of 6 months of the then applicable base salary if the CEO has been employed at least 6 months, and compensation equal to 12 months of the then applicable base salary if employed over 12 months. Effective May 12, 2017, the Company and its Chief Executive Officer entered into a new employment agreement (see Note 9). |
9. Subsequent Events
9. Subsequent Events | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Reverse Stock Split On May 8, 2017, the Company filed a certificate of amendment (the “Certificate of Amendment”) to its certificate of incorporation with the Secretary of State of the State of Delaware to effect a one-for-3.5 reverse stock split (the “Reverse Split”) of the Company’s common stock, with no reduction in authorized capital stock. Pursuant to the terms of the Certificate of Amendment, the Reverse Split became effective at 11:59 p.m. Eastern Time on May 8, 2017. In the Reverse Split, every 3.5 outstanding shares of common stock became one share of common stock. No fractional shares were issued in connection with the Reverse Split. Subject to the terms of the Certificate of Amendment, stockholders who were otherwise entitled to receive a fractional share of common stock received one whole share of common stock. The Reverse Split was previously approved by holders of a majority of the Company’s issued and outstanding common stock. All common stock and stock incentive plan information in these financial statements has been restated to reflect this split. Conversion of Convertible Notes In connection with the funding of the Company’s initial public offering of its units (the “IPO”), on May 12, 2017, the principal and interest due under the Company’s convertible notes, in an aggregate amount of $1,726,079, was converted into 1,232,859 shares of the Company’s common stock. The purchasers of the convertible notes are subject to lock-up requirements with respect to the conversion shares for periods that expire on May 9, 2018. Initial Public Offering of Units The Company’s Registration Statement on Form S-1, as amended (Reg. No. 333-214724), was declared effective by the Securities and Exchange Commission (the “SEC”) on May 8, 2017, and the Company’s Registration Statement on Form S-1 (Reg. No. 333-217788), which was filed on May 8, 2017 with the SEC pursuant to Rule 462(b) of the Securities Act of 1933, as amended (the “Securities Act”), became effective upon filing. These registration statements registered the securities offered in the IPO. In the IPO, the Company sold 1,932,000 units at a price to the public of $5.00 per unit, including the full exercise of the underwriters’ option to purchase additional units. The IPO closed on May 12, 2017 and the underwriters exercised their overallotment option as of May 22, 2017, as a result of which the Company raised net proceeds of approximately $8.6 million after deducting approximately $773,000 in underwriting discounts, commissions and expenses and approximately $297,000 in offering expenses payable by the Company. National Securities Corporation and Dougherty & Company LLC were the underwriters of the IPO. No payments were made by the Company to its directors or officers or persons owning ten percent or more of its common stock or to their associates, or to the Company’s affiliates, other than payments in the ordinary course of business to officers for salaries and to non-employee directors as compensation for board or board committee service. IPO Underwriters’ Warrants In connection with the closing of the IPO, the Company issued to the underwriters and their designees warrants to purchase an aggregate of 154,560 shares of the Company’s common stock (the “Underwriters’ Warrants”) at an exercise price of $6.25 per share with an expiration date of May 8, 2022. The Underwriters’ Warrants become exercisable on November 8, 2017. Employment and Consulting Agreements Effective as of May 12, 2017 upon the closing of the IPO, the Company entered into amended and restated employment agreements with Francois Michelon, its Chief Executive Officer and Chairman of its Board of Directors, and Michael Thornton, its Chief Technology Officer. Mr. Michelon’s employment agreement provides for an annual base salary of $325,000 and eligibility for an annual cash bonus up to a percentage of such base salary (in 2016, up to 35% of his base salary then in effect). Mr. Thornton’s employment agreement provides for an annual base salary of $245,000 and eligibility for an annual cash bonus up to a percentage of such base salary (in 2016, up to 22% of his base salary then in effect). The employment agreements also provide for eligibility to receive benefits substantially similar to those of the Company’s other senior executive officers. Pursuant to the employment agreements, Mr. Michelon and Mr. Thornton were each granted stock options to purchase a number of shares of the Company’s common stock, that, taken together with the number of shares such officer already held, equal 5.0% of the Company’s total issued and outstanding shares of common stock on a fully diluted basis following the IPO and underwriters’ exercise of their overallotment option. The stock options have a weighted average exercise price of approximately $4.96, and vest in three equal annual installments beginning on May 12, 2019. Effective as of May 12, 2017, the Company entered into a consulting agreement with StoryCorp Consulting, pursuant to which David Wells will continue to provide services to the Company as its Chief Financial Officer. Pursuant to the consulting agreement, the Company will pay to StoryCorp a monthly fee of $9,000. Additionally, pursuant to the consulting agreement, the Company granted to Mr. Wells a stock option to purchase 15,000 shares of common stock in connection with the closing of the IPO, having an exercise price per share equal to $5.00 (the price per unit to the public in the IPO) and vesting in twelve equal quarterly installments, and will grant to Mr. Wells a stock option to purchase the same number of shares of common stock with the same terms on each annual anniversary of the date of the consulting agreement. The consulting agreement supersedes the consulting agreement previously in effect between the Company and StoryCorp. |
2. Summary of Significant Acc15
2. Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Summary Of Significant Accounting Policies Policies | |
Use of Estimates | The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Management makes estimates that affect certain accounts including deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments or contingencies. Any adjustments applied to estimates are recognized in the period in which such adjustments are determined. |
Basis of Presentation | The accompanying unaudited financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. The balance sheet at December 31, 2016 has been derived from the audited financial statements at such date. For further information, refer to the financial statements and footnotes thereto included in ENDRA Life Sciences Inc. annual financial statements for the year ended December 31, 2016 included in Amendment No. 10 to the Company’s Registration Statement on Form S-1 filed with the SEC on May 1, 2017. |
Cash and Cash Equivalents | The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of March 31, 2017 and December 31, 2016 the Company had no cash equivalents. |
Inventory | The Company's inventory is stated at the lower of cost or estimated realizable value, with cost primarily determined on a weighted-average cost basis on the first-in, first-out (“FIFO”) method. The Company periodically determines whether a reserve should be taken for devaluation or obsolescence of inventory. As of March 31, 2017 and December 31, 2016 no such reserve was taken. |
Capitalization of Fixed Assets | The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred. |
Capitalization of Intangible Assets | The Company records the purchase of intangible assets not purchased in a business combination in accordance with the ASC Topic 350. |
Revenue Recognition | The Company recognizes revenue in accordance with the requirements of ASC 605-10-599, which directs that it should recognize revenue when (1) persuasive evidence of an arrangement exists (contracts); (2) delivery has occurred; (3) the seller’s price is fixed or determinable (per the customer’s contract); and (4) collectability is reasonably assured (based upon our credit policy). For products sold to end users revenue is recognized when title has passed to the customer and collectability is reasonably assured; and no further efforts are required. Future revenue from anticipated new products will follow this same policy. |
Advertising Expense | The cost of advertising is expensed as incurred. Advertising expense for the three months ended March 31, 2017 was approximately $93. Advertising expense for the three months ended March 31, 2016 was approximately $180. |
Income Taxes | The Company utilizes ASC 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized. The Company generated a deferred tax asset through net operating loss carry-forwards. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration. |
Research and Development Costs | The Company follows ASC 730-10, “Research and Development”. Research and development costs are charged to the statement of operations as incurred. During the three months ended March 31, 2017 and 2016 the Company incurred $95,814 and $95,237 of expenses related to research and development costs, respectively. |
Net Earnings (Loss) Per Common Share | The Company computes earnings per share under ASC Subtopic 260-10, Earnings Per Share (“ASC 260-10”). Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted loss per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock (using the “treasury stock” method), unless their effect on net loss per share is anti-dilutive. There were 1,526,004 and 1,346,441 potentially dilutive shares, which include outstanding common stock options, warrants, and convertible notes, as of March 31, 2017 and December 31, 2016. The potential shares, which are excluded from the determination of basic and diluted net loss per share as their effect is anti-dilutive, are as follows: March 31, 2017 December 31, 2016 Options to purchase common stock 151,881 151,881 Warrants to purchase common stock 151,563 152,812 Convertible notes 1,222,561 1,041,748 Potential equivalent shares excluded 1,526,005 1,346,441 |
Fair Value Measurements | sheet, where it is practicable to estimate that value. As of March 31, 2017 and December 31, 2016, the amounts reported for cash, accrued liabilities and accrued interest approximated fair value because of their short maturities. In accordance with ASC Topic 820, “Fair Value Measurements and Disclosures,” we measure certain financial instruments at fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Share-based Compensation | The Company’s 2016 Omnibus Incentive Plan, which has been approved by its board of directors, permits the grant of share options and shares to its employees, consultants and non-employee members of the board of directors for up to 1,345,074 shares of common stock, of which approximately 500,000 remain available to be granted. The Company records share-based compensation in accordance with the provisions of the Share-based Compensation Topic of the FASB Codification. The guidance requires the use of option-pricing models that require the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model, and the resulting charge is expensed using the straight-line attribution method over the vesting period. The Company has elected to use the calculated value method to account for the options it issued in 2017 and 2016. A nonpublic entity that is unable to estimate the expected volatility of the price of its underlying share may measure awards based on a “calculated value,” which substitutes the volatility of appropriate public companies (representative of the company’s size and industry) as a bench mark for the volatility of the entity’s own share price. Currently, there is no active market for the Company’s common shares. The Company has used the historical closing values of these companies to estimate volatility, which was calculated to be 90%. Stock compensation expense recognized during the period is based on the value of share-based awards that were expected to vest during the period adjusted for estimated forfeitures. The estimated fair value of grants of stock options and warrants to non-employees of the Company is charged to expense, if applicable, in the financial statements. These options vest in the same manner as the employee options granted under each of the option plans as described above. |
Beneficial Conversion Feature | If the conversion feature of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method. |
Debt Discount | The Company determines if the convertible debenture should be accounted for as liability or equity under ASC 480, Liabilities — Distinguishing Liabilities from Equity. ASC 480 applies to certain contracts involving a company’s own equity, and requires that issuers classify the following freestanding financial instruments as liabilities. Mandatorily redeemable financial instruments, obligations that require or may require repurchase of the issuer’s equity shares by transferring assets (e.g., written put options and forward purchase contracts), and certain obligations where at inception the monetary value of the obligation is based solely or predominantly on: ● A fixed monetary amount known at inception, for example, a payable settleable with a variable number of the issuer’s equity shares with an issuance date fair value equal to a fixed dollar amount; ● Variations in something other than the fair value of the issuer’s equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer’s equity shares; or ● Variations inversely related to changes in the fair value of the issuer’s equity shares, for example, a written put that could be net share settled. |
Going Concern | The Company’s financial statements are prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a limited operating history and had a cumulative net loss from inception to March 31, 2017 of $13,260,096. The Company has a working capital deficit of $1,659,184 as of March 31, 2017. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and to allow it to continue as a going concern. The accompanying financial statements for the period ended March 31, 2017, have been prepared assuming the Company will continue as a going concern. The Company believes its cash resources are insufficient to meet its anticipated needs during the next twelve months. The Company will require additional financing to fund its future planned operations, including research and development and commercialization of its products. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. Management’s plans to continue as a going concern include raising additional capital through sales of equity securities and borrowing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. If the Company is not able to obtain the necessary additional financing on a timely basis, the Company will be forced to delay or scale down some or all of its development activities or perhaps even cease the operation of its business. The ability of the Company to continue as a going concern is dependent upon its ability to successfully secure other sources of financing and attain profitable operations. There is substantial doubt about the ability of the Company to continue as a going concern within one year after the date that the financial statements are issued. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, and ASU 2016-20, all of which clarify certain implementation guidance within ASU 2014-09. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company is currently in the process of analyzing the information necessary to determine the impact of adopting this new guidance on its financial position, results of operations, and cash flows. The Company plans to adopt the provisions of this statement in the first quarter of fiscal 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU require, among other things, that all income tax effects of awards be recognized in the income statement when the awards vest or are settled. ASU 2016-09 also allows for an employer to repurchase more of an employee's shares than it can today for tax withholding purposes without triggering liability accounting and allows for a policy election to account for forfeitures as they occur. [The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.] Early adoption is permitted for any entity in any interim or annual period. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosure. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |
2. Summary of Significant Acc16
2. Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Summary Of Significant Accounting Policies Tables | |
Anti-dilutive shares | March 31, 2017 December 31, 2016 Options to purchase common stock 151,881 151,881 Warrants to purchase common stock 151,563 152,812 Convertible notes 1,222,561 1,041,748 Potential equivalent shares excluded 1,526,005 1,346,441 |
4. Fixed Assets (Tables)
4. Fixed Assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fixed Assets Tables | |
Fixed assets | March 31, 2017 December 31, 2016 Computer equipment and fixtures $ 571,318 $ 571,318 Accumulated depreciation (291,840 ) (276,150 ) Fixed assets, net $ 279,478 $ 295,168 |
5. Current Liabilities (Tables)
5. Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Current Liabilities Tables | |
Current liabilities | March 31, 2017 December 31, 2016 Accounts payable $ 303,172 $ 227,744 Accrued payroll 187,758 105,258 Accrued employee benefits 32,063 29,552 Accrued interest 100,136 71,998 Notes payable 50,000 50,000 Convertible notes, related party, net of discount 102,562 99,804 Convertible notes, net of discount 1,149,141 800,172 Total $ 1,924,832 $ 1,384,528 |
7. Stock Options and Warrants (
7. Stock Options and Warrants (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Stock Options And Warrants Tables | |
Stock option activity | Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding at December 31, 2016 151,881 $ 10.01 2.47 Granted — — — Exercised — — — Forfeited — — — Cancelled or expired — — — Balance outstanding at March 31, 2017 151,881 $ 10.01 2.22 Exercisable at March 31, 2017 127,995 $ 10.01 2.03 |
Warrant activity | Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding at December 31, 2016 152,812 $ 18.94 3.30 Granted — — — Exercised — — — Forfeited — — — Expired (1,249 ) 10.01 — Balance outstanding at March 31, 2017 151,563 $ 19.01 3.08 Exercisable at March 31, 2017 151,563 $ 19.01 3.08 |
8. Commitments & Contingencies
8. Commitments & Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Commitments Contingencies Tables | |
Future minimum lease payments | 2017 $ 56,486 2018 77,348 2019 79,269 Total $ 213,103 |
1. Nature of the Business (Deta
1. Nature of the Business (Details Narrative) | 3 Months Ended |
Mar. 31, 2017 | |
Nature Of Business Details Narrative | |
Date of incorporation | Jul. 18, 2007 |
State of incorporation | Delaware |
2. Summary of Significant Acc22
2. Summary of Significant Accounting Policies (Details) - shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Anti-dilutive shares exluded from the calculation of earnings per share | 1,526,005 | 1,346,441 |
Options to purchase common stock | ||
Anti-dilutive shares exluded from the calculation of earnings per share | 151,881 | 151,881 |
Warrants to purchase common stock | ||
Anti-dilutive shares exluded from the calculation of earnings per share | 151,563 | 152,812 |
Convertible notes | ||
Anti-dilutive shares exluded from the calculation of earnings per share | 1,222,561 | 1,041,748 |
2. Summary of Significant Acc23
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Summary Of Significant Accounting Policies Details Narrative | |||
Advertising expense | $ 93 | $ 180 | |
Research and development | $ 95,814 | $ 95,237 | |
Anti-dilutive shares exluded from the calculation of earnings per share | 1,526,005 | 1,346,441 | |
Accumulated deficit | $ (13,260,096) | $ (12,518,473) | |
Working capital deficit | $ (1,659,184) |
4. Fixed Assets (Details)
4. Fixed Assets (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Fixed Assets Details | ||
Computer equipment and fixtures | $ 571,318 | $ 571,318 |
Accumulated depreciation | (291,840) | (276,150) |
Fixed assets, net | $ 279,478 | $ 295,168 |
4. Fixed Assets (Details Narrat
4. Fixed Assets (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Fixed Assets Details Narrative | ||
Depreciation expense | $ 15,690 | $ 16,181 |
5. Current Liabilities (Details
5. Current Liabilities (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Current Liabilities Details | ||
Accounts payable | $ 303,172 | $ 227,744 |
Accrued payroll | 187,758 | 105,258 |
Accrued employee benefits | 32,063 | 29,552 |
Accrued interest | 100,136 | 71,998 |
Notes payable | 50,000 | 50,000 |
Convertible notes, related party, net of discount | 102,562 | 99,804 |
Convertible notes, net of discount | 1,149,141 | 800,172 |
Total Current Liabilities | $ 1,924,832 | $ 1,384,528 |
5. Current Liabilities (Detai27
5. Current Liabilities (Details Narrative) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Current Liabilities Details Narrative | |
Amortization of debt discount | $ 351,727 |
Debt discount | 359,745 |
Interest expense | $ 28,138 |
6. Capital Stock (Details Narra
6. Capital Stock (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Capital Stock Details Narrative | ||
Common stock shares, par value | $ .0001 | $ 0.0001 |
Common stock shares, authorized | 50,000,000 | 50,000,000 |
Common stock shares, issued | 723,335 | 723,335 |
Common stock shares, outstanding | 723,335 | 723,335 |
Preferred stock shares, par value | $ .0001 | $ 0.0001 |
Preferred stock shares, authorized | 10,000,000 | 10,000,000 |
Preferred stock shares, issued | 0 | 0 |
Preferred stock shares, outstanding | 0 | 0 |
Common stock to be issued for services | $ 9,000 | |
Stock payable | $ 90,000 | $ 81,000 |
7. Stock Options and Warrants29
7. Stock Options and Warrants (Details) | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Stock Options And Warrants Details | |
Number of options outstanding, beginning | shares | 151,881 |
Number of options granted | shares | 0 |
Number of options exercised | shares | 0 |
Number of options forfeited | shares | 0 |
Number of options cancelled or expired | shares | 0 |
Number of options outstanding, ending | shares | 151,881 |
Number of options outstanding, exercisable | shares | 127,995 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 10.01 |
Weighted average exercise price granted | $ / shares | 0 |
Weighted average exercise price exercised | $ / shares | 0 |
Weighted average exercise price forfeited | $ / shares | 0 |
Weighted average exercise price cancelled or expired | $ / shares | 0 |
Weighted average exercise price outstanding, ending | $ / shares | 10.01 |
Weighted average exercise price outstanding, exercisable | $ / shares | $ 10.01 |
Weighted average remaining contractual term outstanding, beginning | 2 years 5 months 19 days |
Weighted average remaining contractual term outstanding, ending | 2 years 2 months 19 days |
Weighted average remaining contractual term outstanding, exercisable | 2 years 11 days |
7. Stock Options and Warrants30
7. Stock Options and Warrants (Details 1) | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Stock Options And Warrants Details 1 | |
Number warrants outstanding, beginning | shares | 152,812 |
Number warrants granted | shares | 0 |
Number warrants exercised | shares | 0 |
Number warrants forfeited | shares | 0 |
Number warrants expired | shares | (1,249) |
Number warrants outstanding, ending | shares | 151,563 |
Number warrants outstanding, exercisable | shares | 151,563 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 18.94 |
Weighted average exercise price granted | $ / shares | 0 |
Weighted average exercise price exercised | $ / shares | 0 |
Weighted average exercise price forfeited | $ / shares | 0 |
Weighted average exercise price expired | $ / shares | 10.01 |
Weighted average exercise price outstanding, ending | $ / shares | 19.01 |
Weighted average exercise price outstanding, exercisable | $ / shares | $ 19.01 |
Weighted average remaining contractual term outstanding, beginning | 3 years 3 months 18 days |
Weighted average remaining contractual term outstanding, ending | 3 years 29 days |
Weighted average remaining contractual term outstanding, exercisable | 3 years 29 days |
8. Commitments & Contingencie31
8. Commitments & Contingencies (Details) | Mar. 31, 2017USD ($) |
Commitments Contingencies Details | |
2,017 | $ 56,486 |
2,018 | 77,348 |
2,019 | 79,269 |
Total | $ 213,103 |
8. Commitments & Contingencie32
8. Commitments & Contingencies (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Commitments Contingencies Details Narrative | ||
Rent expense | $ 18,968 | $ 18,165 |